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Focus Financial Adds $1 Billion RIA to Platform

focusFocus Financial Partners, LLC (‘Focus’), the leading international partnership of independent, fiduciary wealth management firms, today announces the closing of four marquee deals. Focus has added a new partner firm, Relative Value Partners, while Quadrant Private Wealth Management has completed its transition to become an official Focus partner. Focus also facilitated merger deals for two existing partners, JFS Wealth Advisors and Buckingham Asset Management.

“Focus has seen strong deal momentum in 2015 as high performing, entrepreneurial firms seek to enhance, grow and build continuity into their businesses,” said Rudy Adolf, Founder and CEO of Focus. “Our M&A expertise and value-add programs combined with our almost unparalleled access to capital lends us a unique advantage in attracting high-caliber firms such as these.”

Focus closed the following strategic transactions recently:

Relative Value Partners (‘RVP’), Northbrook, Ill. The addition of RVP brings the number of Focus partner firms in Chicago’s highly-fragmented RIA market to three, following previously completed transactions with Vestor Capital and Strategic Wealth Partners. RVP has over $1 billion in AUM and a team of seven investment professionals serves its high-net-worth client base of entrepreneurs and Wall Street executives. The firm was founded in 2004 by Maury Fertig and Bob Huffman, who previously held senior positions at CitiGroup/Salomon Brothers and each has over twenty years of industry experience. As a Focus partner, RVP will seek to expand its capabilities through strategic hires and acquisitions.

Quadrant Private Wealth, Bethlehem, Pa. Quadrant, a $500 million independent wealth management firm, formed in May 2014 by a team of accomplished advisors formerly of Merrill Lynch, has completed its transition process to formally join Focus. The Founding Partners include Herman Rij, Jason Cort, Kori Lannon and Brian Cort. Last September, Quadrant added Brian Murray as Director of Wealth Structuring. In this role, Mr. Murray, who previously served as a Wealth Structuring Specialist at Merrill Lynch for over a decade, will bolster Quadrant’s estate planning and wealth structuring capabilities.

JFS Wealth Advisors, Hermitage, Pa. Focus facilitated the addition of a seasoned advisor, Thomas Paulus, to its Pa.-based partner, JFS Wealth Advisors. As a sole advisor, Mr. Paulus’ decision to join JFS was part of a continuity plan intended to safeguard his clients’ interests should his ability to serve them be compromised. Mr. Paulus will remain active as a Managing Principal at JFS while his addition to the management team will allow JFS to expand its presence in Pennsylvania, particularly in the Philadelphia area.

Buckingham Asset Management, St. Louis, Mo. Posey Capital Management, an approximately $200 million Houston-based RIA founded by Thomas Posey merged with St. Louis-based Focus partner firm, Buckingham Asset Management. The addition of Posey Capital, which shares Buckingham’s evidence-based investment philosophy, will be the firm’s second location in Texas. Through this merger, Mr. Posey and Jeffrey Eschman, the firm’s Director of Planning, will look to utilize Buckingham’s resources to enhance its services to existing clients, and accelerate Buckingham’s growth in the Houston market. Buckingham has completed five mergers and strategic transactions in 2015, following the most recent addition of Classic Capital, a Short Hills, NJ-based RIA, in April.

In the past 90 days, Focus has brought on four new partner firms and executed multiple mergers.

About Focus Financial Partners, LLC

Focus Financial Partners, LLC, is the leading international partnership of independent, fiduciary wealth management firms. With well over $325 million in annual run rate revenues, Focus provides unrivaled access to best practices, resources, and continuity planning for its partner firms who serve individuals, families, employers and institutions with wealth management, benefit and investment consulting services. Focus partner firms maintain their entrepreneurial independence, while they benefit from the synergies, scale, economics and best practices of the market leader to achieve their business objectives. Focus was included three times on Inc. magazine’s Top 500/5000 ranking of the nation’s fastest-growing private companies in 2010, 2011 and 2014. In 2012, Focus was named a Crain’s New York Business “Fast 50” growth firm in New York City. For more information about Focus Financial Partners, please visit


Posted by:  Steven Maimes, The Trust Advisor


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What the Same-Sex Marriage Decision Means for Couples’ Rights and Benefits

NYT article by Tara Siegel Bernard

marriageThe Supreme Court’s ruling that the Constitution guarantees a right to same-sex marriage means married gay couples can gain all the financial and legal rights and responsibilities of being married, regardless of which state they call home.

The highest court’s landmark decision in 2013, United States v. Windsor, already established that married same-sex couples were entitled to federal benefits. But two major federal agencies, Social Security and Veterans Affairs, look to the states to determine marital status, so couples living in nonrecognition states were generally cut off from receiving those benefits. Same-sex couples were not entitled to many state-conferred benefits either.

With Friday’s ruling, however, all of that changes. Same-sex couples will now be on even ground with the rest of the married population in several significant ways:


Married same-sex couples will be able to file joint returns at both the federal and state levels. These couples are already required to file joint returns at the federal level, but now, couples living in states that did not recognize their unions no longer have to prepare two sets of tax returns: a joint one for the federal government and individual ones for states.

Estate Planning

Same-sex married people living in nonrecognition states will gain rights to administer a spouse’s estate, bring wrongful-death actions and prevent other relatives from contesting wills, according to Ron Meyers, an estate planning lawyer in New York. Individuals will also be able to inherit property from a spouse without paying any state estate or inheritance taxes.


Getting a divorce will become possible for married couples who live in states that did not previously recognize same-sex marriages. Before the ruling, married same-sex couples living in nonrecognition states would typically have had to establish residency elsewhere to get a divorce in that state, said Susan Sommer, director of constitutional litigation for Lambda Legal.

Social Security

With national recognition, all married people, regardless of which state they live in, will be entitled to spousal, survivor and other benefits. But that does not solve everything. Couples must be married for nine months before they become eligible for survivor benefits, yet some couples did not have the ability to marry in their home states until recently — and their spouses died before they met the nine-month requirement. “That will remain an issue,” said Cathy Sakimura, family law director at the National Center for Lesbian Rights.

Veterans’ Benefits

National recognition will extend benefits to all same-sex married couples who would otherwise be eligible. Before the ruling, benefits were limited to couples whose marriages were recognized by the state where they lived at the time they were married or where they lived when they filed a claim for benefits.

Medical Decisions

In the absence of medical directives or power of attorney, states may designate who should make medical decisions for people who are incapacitated or unable to make decisions on their own. Spouses will be recognized in places where they currently are not.


Posted by:  Steven Maimes, The Trust Advisor


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Has SCOTUS Created a Way to Get Around the Estate Tax?

American Thinker opinion article by Vel Nirtist

Sometimes, at a most solemn moment, a most irreverent thought shoots through the mind. When I heard that the US Supreme Court legalized gay marriage, my thought was “I wonder what the estate tax lawyers will make of it?”

How about advising a terminally ill widowed grandma to marry her much-beloved granddaughter at the deathbed? Won’t the estate pass to the surviving spouse intact? I’m not a lawyer, but I think it will — without IRS getting the bite out of it as would happen now.

And it would be very hard to have a sound legal argument against such marriage. Isn’t it born out of love? Absolutely. But doesn’t it go against the prohibition of marriage with a blood relative? But this prohibition is rooted merely in the very same authority that also prohibits the same-sex union, and hence could survive judicial review if litigation results.

The law of unintended consequences may work to surprising effect. The very people who are today repelled by the court’s decision may come to embrace it as a tool of keeping their wealth in the family; the government that is now elated with the court’s decision, may yet come to rue it when US Treasury’s estate tax revenue dwindles.


Posted by:  Steven Maimes, The Trust Advisor


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Wealthy Suffer From ‘Estate-Planning Fatigue’

Wealthy Suffer From ‘Estate-Planning Fatigue’ article by Shelly Schwartz

EstatePlanningDespite their wealth and business savvy, more than one-third of high-net-worth families have not taken the most basic steps to protect and provide for their loved ones when they die, according to a recent survey by

The CNBC Millionaire Survey found 38 percent of those with investable assets of $1 million or more have not used a financial expert to establish an estate plan, while 62 percent have.

Individuals with $5 million or more (68 percent) were more likely to do so, compared to those with $1 million to $5 million in assets (61 percent), according to the survey, conducted by Spectrem Group for CNBC, which polled 750 millionaires.

Republicans (68 percent) were also more likely to use a financial advisor to establish an estate plan than Democrats (61 percent) or independents (58 percent).

The numbers don’t surprise Mitch Drossman, national director of wealth-planning strategies for U.S. Trust, who said the constant changes to the federal estate-tax law for nearly a decade (until it was made permanent in 2013) resulted in “estate-planning fatigue.”

“We have had an incredible amount of uncertainty with respect to estate taxes, and every change led advisors to reach out to their clients to explain these changes and be sure their documents were up to date and reflective of those changes,” he said. “Clients finally said, ‘Enough already.’”

The higher federal estate-tax exemption amount, which now stands at $5.43 million per person due to annual inflation adjustments, has also rendered estate planning a lesser priority for many wealthy families, said David Mendels, a certified financial planner and director of planning for Creative Financial Concepts.

Married couples can combine their exemptions to give away $10.86 million tax-free in 2015.

“I think people tend to think of estate planning as being primarily a means to reduce estate taxes, and therefore, if they don’t have to pay estate tax, they may feel they don’t have to do any planning,” said Mendels.

But 15 states, including New York, Connecticut and Massachusetts, as well as the District of Columbia, levy their own estate taxes, which kick in at much lower thresholds. New Jersey’s exemption, for example, is $675,000, Rhode Island’s is $921,655, and Maryland’s is $1 million. “Depending on where you live, estate taxes may still be a factor,” said Mendels.

Estate planning, however, is about much more than the size of one’s taxable estate, he said.

It’s a series of documents that protect your assets, provide for your children and delineate your wishes regarding end-of-life decisions. Absent specific instructions, family members are left to guess at what you would have wanted, causing unnecessary stress and infighting.

“Estate planning is not necessarily synonymous with tax planning,” said Drossman at U.S. Trust. “There are still many valid reasons to do non-tax estate planning to address property management, to protect assets and to address exactly where you stand on issues you may confront later in life, like cognitive decline or disability.

“That’s going to be a bigger issue with longer life expectancies, better medical care and the aging population,” he added.

For families with minor children, a last will and testament is the most critical estate-planning document they can have, said Mendels at Creative Financial Concepts.

“If you have young children, you need a will,” he said. “It’s not about the money. You need to name a guardian for your children, in case something happens to you and your spouse.”

It can also be used to set up trusts for any property your child will inherit and to name a trustee to handle the property until your child reaches the age you specify.

Thy will be done

Failure to do so means the courts would have to decide who is best suited to care for your children if tragedy should strike. A medical power of attorney is another important weapon in your estate-planning arsenal, authorizing an individual to make health-care decisions on your behalf in the event of physical injury or cognitive impairment.

If you’re married, that’s typically your spouse, but if he or she dies first, you’ll need a backup—ideally, someone who is geographically nearby who can communicate in person with your health-care providers, said estate-planning attorney and CFP Austin Frye, founder and president of Frye Financial Center.

“If, God forbid, you are put in a situation from which you are not going to recover, you want to keep control over what happens to you,” said Frye.

Such documents are often created alongside an advanced medical directive for physicians, also called a living will, which clarify your wishes regarding end-of-life medical treatment, including resuscitation and organ donation. (Make sure you have a HIPAA form attached, which grants your power of attorney the right to access your medical records, which are protected under privacy laws.)

A durable financial power of attorney document is also necessary, as it identifies the person you’d like to manage your money if you are unable to make decisions for yourself, said Frye. Such legal documents grant that person legal authority to pay taxes on your behalf, borrow money, pay your bills, invest and handle bank transactions.

With higher income-tax rates in effect, tools and techniques that help minimize the income-tax hit to your estate—and your heirs—are playing a far bigger role in estate planning today, said Mendels at Creative Financial Concepts.

Indeed, the top marginal tax rate for wealthy taxpayers now stands at 39.6 percent. Those with higher incomes also face a higher capital gains rate of 20 percent instead of 15 percent, a 0.9 percent tax on earned income (wages) and a 3.8 percent Medicare surtax on net investment income, plus the phaseout of personal exemptions and deductions.

“As estate taxes have come down, the income-tax consequences are much more important,” said Mendels.

For example, trusts remain a valuable tool for protecting assets from creditors, legal claims and offspring with poor money-management skills, but due to recent tax-law changes, they could also leave your heirs with less.

Effective in 2013, trusts that accumulate income are now hit with the 3.8 percent Obamacare tax that applies to net investment income. The beneficiaries are also subject to the highest income-tax rate of 39.6 percent and the top capital gains rate of 20 percent on any income received from the trust in excess of $12,150.

By comparison, the top income-tax rate for individual taxpayers kicks in at $400,000 for single filers and $450,000 for married couples filing jointly.

“Trusts are very versatile, and they can do a lot of things, but these are things that need to be thought through,” said Mendels. “Your heirs may end up paying much more income tax by leaving property to them in trust than if you just gave it to them outright.”

Drossman at U.S. Trust said income-tax implications, as a component of estate planning, have taken center stage at his firm, too. That, and what he calls “reverse estate planning.”

“In some cases we’re helping clients unwind or reverse some of the estate planning they had done in the past, because it may no longer be needed, given the significant estate-tax exemption or because it would add to their income-tax cost,” he said.

“The probability of something happening may not be high, but if it does and you haven’t planned, anything is possible, including litigation, higher taxes and complete chaos.” -Austin Frye, founder and president of Frye Financial Center

Some families, for example, are taking assets out of trust and giving them outright to their heirs, since they now fall below the estate-tax exemption line. Others created LLCs or family partnerships years ago to facilitate a discounting of assets, but new rules in some cases prevent assets held in such structures to take full of advantage of the step-up in basis.

Remember: Those who inherit appreciated property, including real estate and stocks, receive a step-up in cost basis for tax purposes based on the current market value on the date of the benefactor’s death. Thus, the beneficiary could sell the property immediately without incurring a capital gain, or sell it years from now and only owe gains based on its price appreciation from the day they inherited it.

“If held in a discounted entity, they’re not stepped up as high as they would have been had they been held outside that entity,” said Drossman. “They may no longer want that in place if they don’t benefit from any estate-tax savings, and they get a lower basis.”

It’s never pleasant to contemplate one’s own mortality. But high-net-worth families who fail to plan—and there are many—risk exposing their kids’ inheritance to creditors, predators and bitter ex-spouses.

Worse, they leave life’s most important decisions—such as who will care for their kids and whether their spouse should pull the plug—in the hands of the courts.

“You have to plan for the worst and hope for the best,” said Frye of Frye Financial Center. “The probability of something happening may not be high, but if it does and you haven’t planned, anything is possible, including litigation, higher taxes and complete chaos.”


Posted by:  Steven Maimes, The Trust Advisor


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You Don’t Need to Buy the Latest Newfangled Index ETF to Retire Comfortably

MarketWatch article by Chuck Jaffe

etfThe Morningstar Investor Conference this year felt a bit like a car show.

The bulk of the focus was on what’s new and what’s next, with everyone wanting you to try the latest concept or to take some flashy new style for a test drive.

Amid the new-car smell of the event held here last week, there was a whiff of burning investors, the folks who either get torched by using the new tools inappropriately, or who feel singed by being left behind when something new and improved comes along.

But all of the talk about new funds and fund types, different approaches and new strategies doesn’t negate anything about tried-and-true investments, any more than today’s new car ideas mean that everyone has to give up driving the older model that’s in their garage.

The evolution of the fund industry can happen without you, and you can thrive without it.

In fact, investment vehicles are fairly similar to autos in that way.

The mutual fund world is evolving, just as the auto world has.

I have some friends who love their classic cars, the ones that they have cared for and restored and that they still love, despite a lack of modern conveniences like air conditioning, power steering and an automatic transmission, and then I have other friends who love their new vehicles, and wouldn’t think of carting the kids around without video screens or Wi-Fi.

In the fund world, it’s similar.

When I first purchased an index fund decades ago, it was a simple, straightforward index fund, which in those days meant one based on market-capitalization (where the stock with the highest value in the index also is the biggest holding in the index/index fund).

It got everything investors were promised about indexing: diversification, market performance and ultra-low costs.

But now that my children have reached their 20s and are considering buying their first mutual funds to go along with the stock portfolios we built together throughout their childhood, their first index fund most likely should be a “smart-beta ETF” that replicates an index by including equal amounts of every stock in the benchmark.

Intuitively, to me, that construction is better. It makes more sense than the old indexes that were cap-weighted or dollar-weighted.

From the standpoint of my kids, it is “not your father’s index fund,” literally.

Whether I ever change my own portfolio over to any of the newfangled index options is a different question, having more to do with some combination of tax implications and investment options than with the construction of an index itself.

There’s no telling which type of fund will do better in the future; most of the new-style index funds are more about lowering volatility or mitigating risk or more-sensible allocation than they are about delivering better raw returns.

What we can say is pretty simple: No one who is 50 or 60 today is going to reach retirement age, fall short of their goals and say, “Darn, I could have stopped working now if only I had switched from a classic index fund to a smart-beta fund.”

It’s more like driving in a car, where the latest model may ride more smoothly, have better acceleration or breaking and other features, but the real goal is to reach your destination safely.

When you are on the other side — having reached your goals and able to enjoy the fruits of a lifetime of investing — it really doesn’t matter if you got there driving an old clunker or a supercar. All that matters is that you made it.

Indeed, the evolution of funds is similar to the evolution of indexes themselves; while the Dow Jones is still the most widely discussed market measure by the news media, the investment pros use measures like the S&P 500 or the Wilshire 5000 as they’re more finely-tuned gauges of the market.

The old ways aren’t wrong; they still work.

But the fund industry is constantly changing and evolving.

Someday, when my grandchildren buy their first fund, it won’t be the smart-beta index ETF that I would suggest my kids buy today.

The recent rush has been to alternative funds, but the fund industry — and the financial-advisory community which drives a lot of change and innovation as planners try to prove to clients that they are worth the effort and expense — will change its focus and come up with more ideas all the time.

Some of them will be real improvements; investors may well replace what they have today with the next great idea, and then maybe the one that comes up a decade after that.

But if you have great investment vehicles today and you want to ride them to your retirement destination, know that you don’t need to change your portfolio. Your well-built classics can compete and thrive in a world of new cars, and good money management will never go out of style.


Posted by:  Steven Maimes, The Trust Advisor


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Millennials Still Have Debt, are Still Scared of the Stock Market, Goldman Sachs Finds

MarketWatch article by Jillian Berman

No matter how many times you ask them a slightly different version of the same question, millennials’ feelings on money, financial products and big ticket purchases will still remain basically unchanged—a fact pollsters, retailers, think tanks and others seem to be struggling to understand.

For the latest evidence of this trend, enter Goldman Sachs GS, +0.16% The investment banking behemoth released a survey that delved into millennials’ relationship with their money, earlier this week. Despite the expertise and resources the company likely put into unlocking the enigma that is today’s generation of young people, the survey produced exactly zero surprises, such as:

Young people are skeptical of the stock market


Several pollsters have already made this observation, but you don’t need a highly developed survey methodology to figure out that’s the case. Common sense will do just fine. It’s not hard to imagine that 20-somethings whose first semi-adult experience with the stock market was watching their parents’ retirement savings disappear during the financial crisis aren’t super eager to put their money there. They also don’t have much money to begin with.

They also have a lot of debt


Goldman found that if young people came into a magical windfall of cash, the first thing they would do with it is pay down their debt. Again, this comes as little surprise, given that about 70% of today’s college students are graduating with debt and experts have warned that student loans could be the next financial crisis.

The Goldman report makes some other observations—young people typically turn to their parents for financial advice and the Internet for finding a place to live—that won’t come as a shock to millennials or the marketers and reporters that follow them obsessively. Still, Goldman likely won’t be the last organization to present these findings.

As long as banks, retailers and others are grasping to understand this giant generation of consumers and searching for ways to get them to buy their products, it’s unlikely they’ll stop asking these questions any time soon.


Posted by:  Steven Maimes, The Trust Advisor


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Same-Sex Marriage Ruling Levels Financial Playing Field

CNBC article by Ilana Polyak

SUPREME-COURT-GAY-MARRIAGE-RULINGThe Supreme Court today delivered a historic victory for gay rights, ruling 5 to 4 that the Constitution requires that same-sex couples be allowed to marry no matter where they live and that states may no longer reserve the right only for heterosexual couples.

With that Supreme Court decision extending the right to marry to gay and lesbian couples in all 50 states, same-sex couples in 14 states where there were bans have many financial issues to consider.

By normalizing marriage laws across all 50 states, the Supreme Court ensures that the same set of laws will follow married same-sex couples wherever they move.

“In our increasingly mobile society, there are same-sex couples who might have been thinking of relocating to a state where their marriage isn’t recognized,” said certified financial planner Stuart Armstrong of Centinel Financial Group. He is also on the board of Pride Planners, a network of financial planners with expertise in working with same-sex couples.

Previously, couples living in states that didn’t recognize same-sex unions could not collect a spousal benefit on Social Security, even though it’s a federal benefit and even if they had been married in a recognition state. This was a big consideration for couples thinking about relocating for warmer locales in retirement like Florida and Texas. Now, all couples can access Social Security spousal benefits.

Those who filed an application two years ago after the Supreme Court’s Windor decision overturning some aspects of the Defense of Marriage Act might be able to collect the benefit retroactively, said Armstrong. The key is to have filed the application.

The estate tax was thorny, too. Spouses are able to pass on unlimited assets tax free on the federal level. But if they lived in states where their marriages were not recognized and that state had its own estate tax, those assets would be taxed if they exceeded certain thresholds.

Travel, too, will become less worrisome, advisors said. Same-sex spouses no longer have to worry about being shut out of medical decision in the unfortunate event that one partner needs medical care while traveling to a non-recognition state.

“It’s still a good idea to carry certain [estate planning] documents, at least in this period of transition,” Armstrong said.

“What this does is it levels state law with federal law,” said Matthew McClintock, an estate lawyer and vice president of education for WealthCounsel.

Same-sex couples will now enjoy the same benefits—and sometimes downsides—of marriage that all other couples get, McClintock said.

Here are some financial issues that will be impacted by the decision:

Estate planning. The biggest outcome of the victory say estate attorneys is that same-sex married couples now have the same legal rights of spouses. They have the right to inherit property from their spouse even without a will, the right to adopt children together and make medical decisions on the part of a spouse.

Same-sex couples won’t need to jump through hoops to take care of common financial and estate issues, said certified financial planner Nan Bailey of NPB Wealth Management.

“Rather than focus on ‘work arounds’ for rights and protections, the focus shifts to looking at [whether] there are any benefits that a spouse or child would be entitled to if this couple had been able to marry earlier,” she said.

“For wealthy families, they get all the estate tax benefits,” said Janis Cowhey, a lawyer and tax expert with Marcum’s modern family and LGBT services practice group. “For couples of not significant wealth, this is more about protections.”

When one spouse dies, all assets pass to the surviving spouse tax-free. But when couples were unable to marry and had estates of more than $5.34 million, the surviving partner had to pay the estate tax. Now gay and lesbian couples will receive the tax-free transfer.

Federal taxes. In filing state taxes, couples typically complete their federal return first. That gives them their adjusted gross income, a number that carries over to state tax returns. But couples in the states that didn’t recognize marriage were forced to file two sets of returns.

First, they would file a federal return as married. Then file a dummy return as singles in order to file a state return.

“It really simplifies things,” McClintock said. “Now you can do a married filing jointly even if your state doesn’t like the fact that you’re in a same-sex marriage.”

Feeling the tax bite. One area where it’s not beneficial to be married is when it comes to dealing with the so-called “marriage penalty.” Two high-earning people will pay more in taxes when filing jointly than they would on their own.

For example, two singles each making up to $89,350 would each be in the 25 percent tax bracket if they were to file on their own. But together, their $178,700 combined income puts them in the 28 percent bracket. The 25 percent bracket stops at $148,850 for couples who are married and filing jointly.


Posted by:  Steven Maimes, The Trust Advisor



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The Myth of the Simple Will

By attorney Robert Fleming

will-i“I don’t want anything complicated,” said our new client. “I just want a simple will.”

For almost four decades, we’ve been waiting for the client who wants a complicated will. We’re still waiting.

We hear the “I only want a simple will” request often. What clients really mean, of course, is “I want a cheap will.” That is, they don’t want to pay a lot for the legal advice or preparation of elaborate documents.

Our favorite variation is the client who wants a simple will, then tells us their assets are straightforward and their family situation ordinary. You know — the half-interest in a summer cabin in another state, the oil and gas interests in two other states and the closely-held family corporation that is worth somewhere between $1,000 and $10,000,000. And family situation? You know — one child has a developmental disability, another a drinking problem and the third is married to a spendthrift. But we’re just going to disinherit one, split things between the other two and trust them to work everything out.

We send a questionnaire to our prospective estate planning clients, so that we can figure out at least some of the possible issues during our first meeting — which is much more productive if we have the information at hand. Clients sometimes show up without having filled out the questionnaire, since they aren’t sure they want to hire us (hah! who wouldn’t want to hire us?) and they don’t want to go through the trouble of collecting information. More dangerous, though, are the clients who intentionally leave some of their assets off the questionnaire — in a misguided attempt, we suspect, to minimize the cost of their estate planning. That’s a little like not mentioning to the dentist that you have a persistent and painful temperature sensitivity on one tooth, hoping that it won’t need any expensive work.

Why do we even care about what assets you own? Isn’t it because we can charge you more if we know how wealthy you are?


We need to know about your assets to figure out whether you have an estate tax issue. Are you pretty sure you aren’t worth the $5 million that is required before federal estate tax concerns? OK — but what about state estate taxes? Though Arizona doesn’t have one, the state where you have that summer cabin might impose one. And have you added in the face value of your life insurance policies? Also the trust your grandfather left for you, which you don’t think of as “yours”? Also the possible inheritance from your parents? Those questions are all on the questionnaire, so that we can discuss them with you.

One of the principal questions we are going to talk about with you is whether you should have a living trust. Don’t worry — we’re not going to order you to do anything. But we do want to be able to give you a realistic estimate of the cost of probating your estate, and what you might reasonably do to avoid or minimize that cost. Without good information, we can’t give you either estimate.

There are real costs associated with choosing a “simple” will. We want to be able to estimate those for you, so that you can make informed decisions. By the end of our initial conversation, we will almost certainly be able to give you a flat-fee estimate of the cost of preparing your estate plan, with at least a couple variations for you to consider. Then you can decide how much simplicity you can afford.

How often do our clients end up with what might be called a simple will? If we get to define “simple,” our estimate is about half the time — or perhaps slightly less often than that. But even clients with those simple wills also have financial powers of attorney, health care powers of attorney (with living will provisions) and an instruction letter; the entire product of our representation will almost always amount to at least a dozen pages of lawyer language. We’ll also provide a translation/guide to the documents, and we are very interested in helping you to understand the options, your choices and the documents themselves; we don’t charge more for answering questions, and we like to get the opportunity.

A word about flat fees: almost all of our estate planning is done on a “flat-fee” basis. We will quote you a fee in our initial consultation, and that’s what we will charge. Do you need four drafts and extensive revisions? No additional cost. Do you love the first draft, and need no changes? Great — we got it right. But we don’t reduce our fee for doing a good job on the first pass, either. We think that arrangement makes it easy and comfortable for both of us. You get as many appointments, revisions and discussions as you need. We get the comfort of knowing that we heard all your concerns and questions, and that we’ve had an opportunity to address everything.

Even a short, inexpensive will is not simple. It is a profound document, and it isn’t even possible to figure out what it ought to say until we’ve talked through some of the issues.

Oh, and whether your estate plan is simple or complex, inexpensive or less inexpensive, it needs to be reviewed and (probably) revised every five years or so. But that’s different concern we need to grapple with.


Posted by:  Steven Maimes, The Trust Advisor

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How Much is Too Much to Leave Your Kids?

Article by Pamela Yip

inheritance moneyImagine that you’re a self-made person with $100 million in assets.

Do you leave it all to your children?

A coming intergenerational shift in wealth raises many issues for rich families, including how much to give children without doing more harm than good.

Financial advisers say the affluent families they deal with are most concerned with ensuring that their wealth doesn’t snuff out their children’s sense of purpose, ambition and desire to make the world a better place.

“Being a child of wealth shouldn’t be a burden,” said Robert Johnson, regional managing director at the Private Banking & Investment Group of Merrill Lynch in Dallas, “but sometimes it is.”

In a national study of 206 affluent parents in October, Merrill Lynch found that most people plan to leave the lion’s share of their wealth to family members, motivated by a desire to positively influence the lives of loved ones.

Given the amount of wealth that’s expected to be transferred to the next generation, more families will need to be discussing this.

“While the ‘Great Transfer’ (of wealth) from the Greatest Generation to the baby boomers is still taking place, a second and even larger wealth transfer from the boomers to their heirs is starting now and will continue over the next 30 to 40 years,” consulting firm Accenture said in a 2012 report.

“While the Great Transfer will see an over-$12 trillion shift, the ‘Greater’ wealth transfer is much larger, estimated at over $30 trillion in financial and nonfinancial assets in North America,” Accenture said.

So how much is too much to give your child?

There’s no magic number, but Merrill Lynch draws the line at “when the money creates a disincentive to achieve one’s full potential.”

“Too often, people think only about dollar amounts, not impact, when deciding how much is too much to give,” said Michael Liersch at Merrill Lynch Wealth Management. “There is no silver-bullet answer or one-size-fits-all approach to gifting assets. The process of meaningful, intentional giving, whether to family, friends or philanthropy, should be highly personalized. It requires honesty, humility and a willingness to face this all-important topic head-on.”

Bankers who work with the wealthy said they try to help families more clearly define what they want to pass on to their children.

“The first step in that is to really look at the overarching question of what do you want your legacy to be,” said Pete Chilian, managing director of the J.P. Morgan Private Bank in Dallas. “Perhaps the most challenging part in that is how much to give away during your life.”

Many wealth advisers also offer programs for young heirs on financial stewardship and money management.

“Even though some of them don’t have an aptitude or an inclination to learn about money management, it’s still important that they’re financially literate before finding themselves with a significant amount of wealth,” Chilian said.

Many families will form a foundation and have their children serve on the board so they can get their philanthropic feet wet, Johnson said.

“The thing that high-net-worth people worry about is that the money ruins children instead of enriching their lives,” he said.

That’s something that all of us want for our children, no matter how much money we will pass to them — for them to grow up to be productive, self-sufficient individuals wanting to better society.


Posted by:  Steven Maimes, The Trust Advisor

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Morgan Stanley Wants Google to Stop Hiding How it Gets its Revenue

Business Insider article by Jim Edwards

Google CFO Ruth Porat

Google CFO Ruth Porat

Morgan Stanley analyst Brian Nowak and his team believe that Google could add more than $100 to its stock price if it became a bit more transparent about how it makes its revenues.

GOOG is trading around $541. Nowak’s note is titled “The Pathway to $650.”

It reads like an open letter to new Google CFO Ruth Porat, who replaced Patrick Pichette earlier this year.

Nowak can expect Porat to actually read this note, because she came to Google from … Morgan Stanley.

For a long time, Google has given almost no meaningful breakouts of the various products that drive its revenue. It reports sales from “advertising” and “other,” and it breaks out United Kingdom revenue. It also provides percentage growth rates aggregate paid clicks and average cost-per-click.

That all adds up to more than $60 billion in revenues per year.

But the company has, for the longest time, said nothing about what really drives that $60 million: YouTube? Search? Mobile? Desktop? Gmail?

No one really knows.

That leaves analysts guessing how Google earns its money. Here’s Morgan Stanley’s revenue estimates for YouTube, for instance:

Nowak’s note goads Porat by pointing out that some of Google’s competitors — like Facebook, Amazon and Expedia — get better stock valuations because they have broken out some of their numbers more clearly:


Enhanced disclosure around mobile search and YouTube would help investors better asses GOOGL’s performance and long-term competitive positioning, and should result in a higher valuation.We believe that GOOGL has the largest mobile ad rev base(~50% larger than FB), but we are not certain. This uncertainty, mixed mobile search agency checks and FB’s strong and disclosed mobile results create ambiguity about GOOGL’s long-term positioning. At YouTube, third party data show audience leadership, but rev and growth are unknowns. A 10%+ expansion in GOOGL’s multiple from more detailed disclosure seems plausible given AMZN and EXPE’s 13-18% mult expansion (in part) from improved disclosure.

There is some chutzpah there — neither Amazon nor Facebook break down their revenues on a product by product level. A better comparable might be Apple, which breaks down sales by device and service. Nonetheless, almost all tech companies provide more detail than Google does.


Posted by:  Steven Maimes, The Trust Advisor


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